Reveal Chat’s Antitrust Case Dismissed, with Partial Leave to Amend

Judge Beth Labson Freeman of the Northern District of California granted on Wednesday Facebook’s motion to dismiss the plaintiffs’ complaint, finding that the plaintiffs’ claims were time-barred and failed to state various claims.

Previously, plaintiffs Reveal Chat Holdco et al. filed a lawsuit in January against Facebook for antitrust violations; the plaintiffs relied on Facebook’s APIs to operate. The plaintiffs asserted that when Facebook moved into the social data and social advertising markets it acted anticompetitively, through its acquisitions of Instagram and WhatsApp and by cutting off third-parties from its APIs. In March, Facebook filed a motion to dismiss and Facebook filed a reply in support of the motion in May. In the motion to dismiss, they argued that that plaintiffs’ claims are time-barred because they fall outside of the four-year statute of limitations and that they lack antitrust injury. Facebook also asserted that plaintiffs did not claim plausible product markets and they have otherwise failed to state a claim which relief can be granted.

The incidents that the plaintiffs allege occurred five to eight years before the complaint, as a result, Facebook argues that the four-year statute of limitations has run and the request for injunctive relief is barred by the doctrine of laches. The court found that the doctrine of laches applies.

The plaintiffs also argued that Facebook fraudulently concealed “specific facts of its anticompetitive conduct from Plaintiffs until November 6, 2019,” through NDAs and other means. The court found that the plaintiffs “have failed to sufficiently plead fraudulent concealment because they have not pled that Facebook took affirmative acts to mislead them,” as is required to sufficiently allege fraudulent concealment. Moreover, this concealment must also be active and not passive. According to the court, the plaintiffs have also not alleged active concealment because they have not shown that “Facebook took any affirmative acts to mislead them.” Thus, the court found that the plaintiffs have not met the burden to establish fraudulent concealment.

The court also rejected the plaintiffs’ argument that some of Facebook’s conduct is a continuing violation, specifically the acquisition and integration of WhatsApp and Instagram. The plaintiffs argued this harm was ongoing until at least March 2019 and the acquisition and integration of the apps have been occurring since January 2016. The plaintiffs said “Facebook’s March 2019 announcement about the ongoing back-end integration of Instagram and WhatsApp constitutes a new act that is not a reaffirmation of a previous act and inflicts a new and accumulating injury.” The court disagreed, finding that the “continuing violation doctrine does not make sense in the context of anticompetitive mergers, and therefore it should not apply to Section 7 claims under the Clayton Act.”

Facebook also argued that the plaintiffs did not plead antitrust injury; the court agreed. The court also notes that it is unclear if plaintiffs are competitors or consumers of Facebook, so they fail to satisfy the requirements of antitrust injury. The plaintiffs have leave to amend the complaint for fraudulent concealment but cannot amend for its other arguments.

Facebook is represented by Wilmer Cutler Pickering Hale and Dorr LLP. The plaintiffs are represented by Bathaee Dunne.